In this article, we’ll look at ArcelorMittal’s 1Q17 cash flow and leverage positions. As of the end of 1Q17, ArcelorMittal had net debt of $12.1 billion.
ArcelorMittal’s 1Q17 operating income rose sharply in 1Q17 compared to 4Q16. There are several other metrics we can look at to assess a company’s financial performance.
Because China is the world’s largest steel consumer, it’s important for investors in companies such as U.S. Steel, ArcelorMittal, POSCO, and Gerdau to keep track of the Chinese steel industry.
Tata Steel is exiting its UK operations after years of losses. But ArcelorMittal gets ~50% of its revenues from Europe, leveraging it to European steel.
The US has imposed preliminary duties on three key steel product categories: hot rolled coil (or HRC), cold rolled coil (or CRC), and corrosion-resistant steel products.
Integrated operations have been one of the factors driving steel companies’ recent performances. Iron ore and coal mining fall under steel companies’ upstream operations.
From a purely net asset value return standpoint, PRASX was a below-average performer for both the one-year period until February 29, 2016, and for 2015.
The Bank of Korea maintained its interest rates at record lows of 1.5% in its December meeting. The central bank felt the eased policy stance would assist economic growth momentum.
ArcelorMittal’s YTD price movement has been falling quarter-over-quarter in 2015. After the 3Q15 earnings report, the company fell by 0.55% to close at $5.43 per share.
In May, US steel imports from South Korea and Russia fell 39% and 65%, respectively, in May. Steel imports from Japan and Brazil increased 20% and 11%, respectively.
Spot steel prices have inched up a bit after hitting their low in May. If the US steel demand stays strong and imports decline further, as they did in May, spot steel prices could see further upward movement.
May construction spending data, released on June 1, came in at a SAAR of $1.04 trillion. This is the second straight month where construction spending has passed $1 trillion SAAR.
The construction sector accounts for more than 40% of total steel consumption in the US. In April, construction spending increased 2.2% over the previous month.
US steel consumption grew at 11.7% last year. However, for this year, the World Steel Association expects consumption to decline 0.4% over the previous year.
The decline in China’s real estate climate index is an indicator that Chinese construction activity has slowed down. China’s real estate sector is a key driver of global steel demand.
Steel scrap prices tanked by more than 25% in February. This helped mini mills. They were at a competitive disadvantage due to the decline in iron ore and coal prices.
March housing starts declined 3.5% on a YoY basis. In February, housing starts dropped by 2.3%. The data was released on April 16. It was lower than expected.
India’s current account deficit rose to 4.8% of GDP in 2012–2013, largely financed through hot money flows, and exceeded the government’s target level of 2.5% to 3% of GDP.
